One of the big problems for the markets right now is that no one knows what anyone is holding -- and what those holdings are worth. CDOs
. Subprime RMBS
-40. Okay, I threw that last one in there for fun. But seriously, we have a ton of complicated, opaque, hard-to-value, "mark-to-model," paper floating around out there somewhere in the hedge fund/banking/brokerage world. It might be worth something. It might be worth nothing. It might cause minor losses in the finance sector. It might cause major losses. We just don't know.
And it's not just the average investor who's in the dark, either. If you really want to feel warm and fuzzy on the inside, check out this headline from a Bloomberg
story: "CDO Losses Can't Be Quantified, France Regulator says"
You can't make this stuff up. Even the regulators -- the government regulators who are suppose to be overseeing the market for this complex paper -- are at a loss. That's comforting.